Another Market Solution

Yesterday I blogged about a Wiki I posted to improve the public comment process for federal regulation. I seeded the Wiki with a proposal to let the market solve the short selling controversy by letting issuers or shareholders set their own rules about what investors can do with shares in their particular company. Then the equity market, not government regulators, could price the value of stock lending and any conditions imposed on borrowers or lenders. (Head to the Wiki and edit if you can — it needs your help!)

Today, thanks to Dominic Jones on Twitter, I just read a fascinating piece about a market solution to the credit rating agency problem. John Sviokla of the Kellogg School of Management endorses on a Harvard blog “a utility that makes corporate data much more accessible by accelerating the use of XBRL to report and publish financial data[,] an ‘open market’ in ratings, where individuals or firms can publish their debt ratings, and a leaderboard in which we collectively assess which ratings do the best job over time of predicting the outcomes of different debt instruments.”

Like Charlie Hoffman, who invented XBRL, “I certainly don’t have all this figured out yet, but there are some things which are very clear.” Well at least one thing is clear: As Ferris Bueller said, “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.” And also, structured computer languages like html, xml, php, and xbrl may be the most important developments in promoting market solutions to what have been traditionally seen as government problems since, well, ever?